Multinational tax net tightens
The global effort to extract a fair share of tax from multinationals is stepping up, say Tax Commissioner Chris Jordan. Courtesy ABC News24
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Some of the biggest multinational petrol and gas companies operating in Australia – including Shell and Chevron – notched sales of nearly $30 billion last year but did not pay a cent in petroleum resource rent tax.
Introduced by the Keating government, the tax was designed to share profits from Australia's oil and gas wealth with the public.
Illustration: Simon Letch
Data released for the first time by the Australian Tax Office on Thursday showed the oil and gas sector as a whole paid $1.7 billion in PRRT in 2013-14.
BHP Billiton was the biggest contributor, paying $970 million from three of its petroleum divisions. Esso Australia paid $540 million and Woodside Energy $85 million.
But other players in the petrol and liquefied natural gas markets - Shell and Chevron - paid no PRRT in 2013-14.
Shell paid no petroleum resource rent tax in 2013-14. Photo: Bloomberg
Shell made sales of almost $25 billion in the same financial year, paying just $87 million in income tax on taxable profits of $1.2 billion and no PRRT.
The company said in a statement: "Shell's record capital investment in Australia in recent years has impacted tax liabilities - yet direct cash taxes in Australia amounted to around 38% of profits for the last five years, or some $3.6 billion.
"Shell is in a significant investment phase in the upstream business with several projects still in development and therefore not generating taxable income."
Tax Commissioner Chris Jordan, pictured with Treasurer Scott Morrison. Photo: Dallas Kilponen
US-based Chevron made sales of $3 billion but paid no income tax in Australia and no PRRT.
The ATO also released figures on the mining resource rent tax - better known as Labor's mining tax - which was scrapped by the Abbott government. It raised less that $300 million in 2013-14.
Designed by economist Ross Garnaut in the late 1980s, the petroleum resource rent tax aims to tap "rents", or excessive returns. After all available tax deductions are taken, it is supposed to extract up to 40 per cent of profits from a project in recognition that companies have been granted the right to extract a finite national resource.
Part of the Gorgon gas project, jointly owned by Chevron, Shell and ExxonMobil.
But there are a range of deductions related to exploration and capital expenditure that lower taxable income and PRRT exposure.
Fairfax Media revealed last month that PRRT revenue was projected to flatline for the next decade, despite $60 billion in gas-related investments coming into production during that period.
Figures from the Department of Industry, the ATO and Commonwealth budget papers, suggest the effective rate of PRRT being paid has plummeted from 24 per cent of total industry revenues in 2003/04 to barely 5 per cent in 2013/14.
This is forecast to fall further to about 2 per cent, compared with the $60 billion the gas sector will earn in sales in 2018/19.
When the $US54 billion Gorgon gas project off Western Australia – jointly owned by Chevron, Shell and ExxonMobil – was announced in 2007, Chevron and then WA treasurer Eric Ripper promised that Gorgon would deliver $17 billion in PRRT and company income tax.
Chevron recently dismissed a report by the Transport Workers Federation, insisting that the company does not avoid paying its taxes.
In releasing the data on Tuesday, ATO Commissioner Chris Jordan said a company not paying tax did not necessarily indicate tax avoidance.
"Any companies with unusual financial or taxation numbers are closely investigated by the ATO," he said.
Assistant Treasurer Kelly O'Dwyer said the ATO, which is cutting more than 4000 staff between 2014 and 2018, is resourced to tackle tax avoidance.
"The Australian people can be absolutely confident that the Australian Taxation Office have all the powers they need to ensure they are getting the information about the structuring and arrangements in these multinational companies," she said.
The campaign director of activist group GetUp!, Mark Connelly, said: "The polluting energy companies game the tax system to avoid paying their fair share, pay no price for polluting our air and water, and receive billions per year in subsidies from the community."
